Productivity Dynamics and the Role of “Big-Box” Entrants in Retailing

Florin Maican and Matilda Orth

No 328, Working Papers in Economics from University of Gothenburg, Department of Economics

Abstract: Entry of large (“big-box”) stores along with a drastic fall in the total number of stores is a striking trend in retail markets. In this paper we provide a dynamic structural model, controlling for unobserved prices and local market characteristics, to estimate total factor productivity in retail markets. Then we evaluate how increased competition from large entrants influences incumbents’ productivity in local markets. Using detailed data on retail food stores in Sweden, we find that net entry substantially contributes to industry productivity growth. In local markets, productivity dispersion increases as a consequence of large entrants, i.e., low productive incumbents become less productive whereas high productive incumbents become more productive. We conclude that large entrants play a central role in explaining productivity differences across stores.

Keywords: Retail markets; Imperfect competition; Industry dynamics; TFP; Space productivity; Dynamic structural model (search for similar items in EconPapers)
JEL-codes: C24 L11 O30 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2008-11-12
New Economics Papers: this item is included in nep-com, nep-eff, nep-ind and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Productivity Dynamics and the Role of ‘Big-Box’ Entrants in Retailing (2017)
Working Paper: Productivity Dynamics and the Role of “Big-Box” Entrants in Retailing (2015)
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